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Strategies & Market Trends : Contrarian Investing

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From: pcyhuang	9/25/2007 11:01:05 PM
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ETFC @$11.89 -- Contrarian Alert! Fundamental: finance.yahoo.com Excerpts from the NYTimes article on Sept. 22, 2007: "ETrade disclosed that it was cutting its earnings forecast for 2007 by 30 percent because of higher provisions for loan losses and potential securities impairments related to mortgages." "Mitchell H. Caplan, ETrade’s chief executive, said the company would likely take a $95 million charge in the second half of 2007 and a $245 million provision for loan losses. The company also expects to record an impairment charge of $100 million to reflect deterioration in the performance of second lien loans and collateralized debt obligations...." "It’s important that our constituencies appreciate that we have a significant capacity to hold these loans to maturity, and we have $13 billion of excess capacity at the Federal Home Loan Bank.” "It showed $690 million in unrealized losses in securities held on its books at the end of June, a vast majority in mortgages." My Letter to the NYTimes: Ms. Gretchen Morgenson: I think that you have missed the optimum timing for the publication of your article about ETFC. Quote: "It showed $690 million in unrealized losses in securities held on its books at the end of June, a vast majority in mortgages." But do you realize how much the mortgage market has changed since then? At the end of June, the mortgage market as represented by the ABX indices was in a very distressed state, with many series of mortgages having locked market prices -- offers were locked on the bid, no spread existed between the two. But have you noticed the sharp improvements in the liquidity and pricing of the mortgage market since then? markit.com Technical analysis: Short term: Long term: pcyhuang

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